The following payoff table shows the profit for a decision problem with two states of nature and two decision alternatives: State of Nature
Decision Alternative s1 s2
d1 10 1
d2 7 3
(a) Suppose P(s1)=0.2 and P(s2)=0.8. What is the best decision using the expected value approach? Round your answer in one decimal place.

The best decision is decision alternative
d2
, with an expected value of
3.8
.

(b) Perform sensitivity analysis on the payoffs for decision alternative d1. Assume the probabilities are as given in part (a), and find the range of payoffs under states of nature s1 and s2 that will keep the solution found in part (a) optimal. Is the solution more sensitive to the payoff under state of nature s1 or s2? Round your answer in two decimal places.

The solution is more sensitive to
s2
, as an increment of
20
for d1(s2) causes a break even between the decision alternatives, whereas it takes an increment of
50
, to provide the same effect for d1(s1).

Rebel technology maintains its records using cash-basis accounting. during the year, the company received cash from customers, $43,000, and paid cash for salaries, $23,500. at the beginning of the year, customers owe rebel $1,000. by the end of the year, customers owe $6,600. at the beginning of the year, rebel owes salaries of $5,600. at the end of the year, rebel owes salaries of $3,300. determine cash-basis net income and accrual-basis net income for the year.

Exercise 12-7 shown below are comparative balance sheets for flint corporation. flint corporation comparative balance sheets december 31 assets 2017 2016 cash $ 201,348 $ 65,142 accounts receivable 260,568 225,036 inventory 494,487 559,629 land 236,880 296,100 equipment 769,860 592,200 accumulated depreciation—equipment (195,426 ) (94,752 ) total $1,767,717 $1,643,355 liabilities and stockholders’ equity accounts payable $ 115,479 $ 127,323 bonds payable 444,150 592,200 common stock ($1 par) 639,576 515,214 retained earnings 568,512 408,618 total $1,767,717 $1,643,355 additional information: 1. net income for 2017 was $275,373. 2. depreciation expense was $100,674. 3. cash dividends of $115,479 were declared and paid. 4. bonds payable amounting to $148,050 were redeemed for cash $148,050. 5. common stock was issued for $124,362 cash. 6. no equipment was sold during 2017. 7. land was sold for its book value. prepare a statement of cash flows for 2017 using the indirect method.

Which of the following is a tax incentive